facebook, it's making the acquisition overnight and stuns the technology world. breakfast, it's a headline -- outrageous -- "bloombergg, it is surveillance." we await a speech from the president from belgium. aboutoculus with david kirkpatrick and a moment. will talk about what is happening overnight with the ham who could decide in mid-may whether further stimulus is needed to keep inflation on track for two percent inflation. , the federalister president of st. louis says policymakers have not necessarily committed. he spoke with betty liu in hong kong. >> that is the idea that he is

providing clarity off of janet yellen's fumble? markettelegraphed to the that the rates are going up and he did not. the fmoc meeting and everyone is doing it. >> those goggles are weird but they're cool. >> we will get a snapshot later on. ,mba mortgage applications, 8:30 a.m. durable goods orders and capital goods orders at 9:45 a.m.

that is the market services pmi, purchasing managers index, art companies spending money? no earnings to speak of today. however, king digital will start trading this morning. these are the guys who make candy crash -- crush. $22.50 which falls in the range. this will be trading about 10x earnings. we will interview the ceo of zacconi,tal, ricardo the man of the hour today. >> how about a data check? currencies,onds, commodities -- euro dollar was at 138. the ruble continues its strength. -- the-year yield

australian dollar continues to show some strength which is a back story to the week. the president is set to speak in brussels. russian weakness, ruble weakness, the sets the peak of weakness on crimea. >> that is so classically wall street. it is so bad and the headlines are terrible and people actually come in and buy. someone has to be a contrarian. >> it's a regional power thing. we will talk to hans nichols later. let's look at the front page. buying virtual reality headset maker oculus and it's worth at $2 billion. it paid 400 million dollars in

cash an. it will pay $300 million at the start up creates -- hit certain milestones and this comes after they paid $19 billion for whats app. and we will speak with david kirkpatrick in a minute on this deal. we want to point out that the white house is extending the health care enrollment deadline for americans once again, trying to get the last stragglers into sign up for health care. a -- grace period will be instituted on the honor system. youhen in doubt, assume will get more time from the government on this thing. >> is it a total train wreck? what hasn't been extended? >> supporters will say who will remember this in decades. the challenge is getting young,

healthy people to sign up. >> that's why this is getting extended. you have to get the healthy people in to pay for the not so healthy people. federalin, the government issuing guidance on the virtual currency. the government says they will tax bitcoin like property but not currency. generateit will taxable income or losses depending what the investor page. you buy a two dollar cup of bitcoin, that would trigger one dollar in capital gains for the coffeemaker and one dollar for the coffee shop. >> they will make it so hard that nobody will want to use this. good luck. >> it takes effect immediately because tax day is coming up on april 15. this means that matt miller

have better spends his bitcoins. >> could it mean property loss? >> he got his bitcoins at a much lower price back in december. >> let's get to the lead story, the shock -- trying toon in cash acquire the brainpower of tech futures. david kurt hat trick is the -- david kirkpatrick is the author of "the facebook effect." what is your first reaction when you heard of this transaction? >> i don't know if i can say it on the air but i was as stunned as anyone as i was asked to the whatsapp acquisition. here is a guy who really has gigantic ambitions. this is my first impression when i met him in 2006 and it remains

my strong impression of him, more so every day. i don't think it's crazy. the money is a lot but when you think about facebook is a company whose goal is to make the world more open and connected, that is the long-term direction that this continues to point. basis, this isal not a $2 billion transaction. it's a $400 million transaction with a lot of funny money attached? t, if you are making billions trading at 100 p/e you have a lot of flexibility to buy things and is probably a smart thing in an industry that changes as quickly as the internet and technology. it is kind of a hedge in a way but it is also a vision for the future which is optimistic which is another characteristic of this extremely unusual leader. >> we wanted to give you a sense

of what the cofounder and ceo of oculus told our brad stone. they sat down about a week ago before the purchase. >> it is one thing to make a prototype that cannot be moved and another thing to make a few hundred dollars in a mass-market. that you can ship out to the world. we have a number of challenges ahead but we are getting closer. . >> there is a lot of questions about whether virtual reality applications can be commercially ball -- viable beyond gaming. question,ot even in in my opinion. in reality, there will be future technologies -- the idea of the feeling that you will be there with someone else without even really knowing in some cases.

this is an inevitability in technology. is soason that oculus important is the first time in affordable technology emerge that gives people the opportunity. it is still in a super early phase. the thing to think about is it is a platform that others will build businesses and services on top of. that means that if it continues to fulfill its promise, it is a gigantic opportunity. it is not the same opportunity as running the facebook service, necessarily, but it is a gigantic potential business. >> thank you so much. you get lucky when the news rakes. brett cohen is with us. i saw you nodding your head as david kirkpatrick talked about the platform concept of oculus,

what does that mean? >> it means developers can build things on top of the platform and it would be a game. mark zuckerberg is talking about everything from classroom experience to courtside entertainment. to sit atlet fu going home and have somebody at a rangers game with one of these things on watching hockey players in five years? >> it could be an experience like a 3-d virtual reality of face time. >> this is like google glass but in 3-d and immersive? >> google glass is an augmented reality technology. oculus is a virtual reality. over the long term, these things can merge. this deal is huge. >> facebook is turning the dial to 11 like in "spinal tap."

>> you are too young to know that. that? you know >> everyone knows "spinal tap." >> stonehenge. >> we've got a busy hour with the president speaking g andreg cohn is with us. dataere will be a lot of out on housing. this is our twitter question of the day -- >> that is a serious question. >> they are on a roll. coming up, we will show you how the oculus riff works. this is "bloomberg surveillance," on bloomberg television, streaming on your phone, your tablet, and bloomberg.com. ♪

>> good morning, everyone. we will bring you the president of the united states speaking in belgium i moment. right now, we will continue our discussion. >> it's a $2 billion gamble for facebook. they invested in virtual reality and the newest acquisition is oculusvr. it has gamers spellbound with anticipation for its release. brad stone tested out the latest version of the headset and he tries to find out whether this would become an actual reality for consumers. >> right now, i am wearing an rift headset. i am flying into space and siesta roads around me. i am firing my machine gun and it's crazy.

maker of the headset is making a big promise that virtual reality will finally feel real. if virtual reality were perfect and we can have an experience with full body language and full presence, feeling like we are in the same space. lucky created the headset in his parents garage. that was only the beginning. this was your hobby. now, you are the cofounder of a company that just earned $75 million and you get to live your passion. >> it's pretty great and amazing to work with a lot of people who are a lot smarter at what they do and not me. isone of the people brandonaribe. >> i was always skeptical because i grew up in the 80's and 90's and there were expect haitians and excitement around it but technology was not rated. luckily, technology is there.

this has thehat potential to change the world. >> that's because oculus has a new technology called positional tracking. his virtual character leans forward when he does. it is the digital world with a new perspective. >> we are finally able to deliver on the process -- on the promise of 3-d which we could not do before. they have a compass to lot with this version of oculus and it is unlike other vr system. i don't feel nausea. it's like i am there. >> it has brought out some competition. sony announced product morpheus. executives at oculus are not worried. >> i think people will jump in because we have proved there is a market for vr. i am a sony fan i hope they take it seriously. i hope it makes vr that much bigger and industry.

>> both companies of many hurdles ahead. it is not clear whether the biggest teaming software developers will embrace the technology. oculusll consumers buyan rift? >> when it's ready and not before. .> our guest host is greg cohn his company makes burner. has zuckerberg of facebook said that 40% of people's time is spent online and 40% of that is spent on social communication. is this purchase a way to kill two birds with one stone? >> absolutely and more of that is mobile. oculus gives them a mobile platform and he wants facebook everywhere. is a big important area of investment for them. many people say that mark

zuckerberg and facebook was late to the shift to mobile and now they might be too early and making up for lost time and perhaps betting on the wrong direction with virtual reality. is not commercially available yet. >> i think it is a long bet. you have to look at this over a long-term horizon but there will be more extremes as that will be virtual. >> i got face time on my iphone. why do i necessarily need an oculus thing over my head if i want to interact with facebook? >> i think wearables will be a thing just like google glass. there is discussion about watches and things like that. people want a device that is more comfortable. that ifottom line is adam is sitting at home and face timing me, he will be forced to see a mercedes-benz commercial.

before he gets to talk to me, right? >> i don't think that's a great experience for users but on the it will happen and facebook has a history of trying to get commercial product embedded into their experience. >> 75,000 orders thus far and the thing does not exist yet. what does that tell you about the future? >> those are developer orders. they are for people who want to build the software or experience the alpha. the scuba mask experience is a little clunky and it is not what the final form will be. it should be like putting on your sunglasses. they will try to get that to a more usable form. hour,ing up in the next howard ward of gamco will be

with us. onwill get his take "bloomberg surveillance," on bloomberg television, streaming on your phone, your tablet, and bloomberg.com. ♪

in belgium,rs field 50 miles or so west of russell's, it is six acres of cemetery in flanders field. 400 are buried there, roughly many missing in action and the president will speak and he is being introduced now and belgium after a tumultuous two days in the hague. good morning to all of you in europe and in the u.s..

we will monitor the president's comments. the bank of japan could decide in mid-may at more stimulus is needed after the country's sales tax is raised next month according to an aide abe tome minister shinsi keep inflation on track. in taiwan, the president said he is willing to meet with protesters who seized the legislature last week. demonstrations grew out of anger over a trade agreement with china and led to violent clashes with holies. a student group leading the purchase called a offer insincere and accuse the president of obstructing progress with the opposition party. three secret service agents assigned to protect president obama and asked her them got sent home after a night of drinking. one of the three was found drunk , passed out in the hotel hallway on sunday the day before the president arrived. the trio were all members of the

counter assault team assigned to the presidential motorcade. >> this is after columbia? >> that was not a good one either. >> it involve locals, as it were. >> it's like they took a page out of the television shows, the scandals of washington, d c >> this is our morning must-read. >> this comes to us from matthew j. talker at dartmouth -- greg, you are in the technology business, is it really that specific that you hire a smart immigrant and you hire that many other people? >> immigration is a big deal for

technology. i was part of white house delegation a year ago and repressed that case. if you think about the olympics, america has great athletes but we don't win all the gold medals. you want the best people on your team whether you are building hardware or software company. >> we will talk about housing and data will show how weather has affected the housing sector and how momentum is starting to cool down. we will be right back with more. ♪

busye president has a travel itinerary in europe. he is at the american cemetery 50 miles west of brussels in

flanders field. it's the acclaimed cemetery from world were one -- world war i, 400 americans are buried there and the president is making somber comments this morning. this is "bloomberg surveillance." we welcome all of you across the world. let's do a quick data check. not much going on today. let's take a look at some of the big losers from yesterday. lions gate has been making a steady progression lower, falling more than 6.5% and out trading at its lowest in 10 months. it's newest film "divergence" underperformed box office expectations. >> i love it. >> you did not see it. carnival is a big loser and customers are hesitant about going on cruises because of a couple of incidents. >> i was down in mobile, alabama when the ss triumph.came into

port >> people staggered off the ship. they said never again. >> they were freaked out. carnival had to offer some cut-rate fares to get people on. >> it narrowed its annual earnings forecast. >> you could not pay me to go on a cruise. and slowdown is coming economist suggest more modest gains. inre is a wide disparity city by city performers. coco is with us. you are doing the digital thing and what's really going on. brad huinter, what is the pulse you see right now? the new homecking developments around the country.

everybody is talking about what happened in the last couple of months with new home sales and traffic and conversions and february whether? buther was a big part of it i think it is a little overblown. >> what is the trend right now? >> sales are going up but there is not as much speed as a month ago. this tic by tic. what is the momentum? >> two things are holding back the housing momentum. prices are up nationally a little more than 10%. mortgage rates are up about one percent over the past year but also, one of the big engines for the housing recovery has been investors buying single-family homes to rent them out and we see less of that now and prices are higher. the big question is whether job growth and income growth will pick up. in the do you observe

kitchen of homes were couple says should we list the house now or not? will the supply come on? >> more people are saying yes especially places where we see price appreciation the last couple of years. no one wants to sell her home at the bottom. now we are seeing a big increase. , dear, wenot selling are going on a carnival cruise. >> you can take a home equity line and then go on a carnival cruise. there is this debate whether to rent or buy. where is that balance now? >> because rates are still so low by historical norms, it still looks cheaper to buy. almost everywhere in the country but not in manhattan. it looks more expensive in manhattan to buy than to rent. >> what do you see in florida? >> miami is extremely strong.

florida is a mixed bag. we are approaching the final stretch of the selling season in florida. i talked to some builders and they say what we are on plan others say there are 20% low plan. it is extremely mixed. southwest florida is very mixed in southeast florida as much stronger and more consistent. central florida is a big mix as well so it's all over the map. >> let's look at california. you say home prices are undervalued. with facebook making a big deal, you have a lot of newly minted billionaires going out there and spending money on new homes. that will keep the market going, isn't it? nationally, houses or five percent undervalued but california is prices are looking overvalued. not bubble territory yet. we are far from where we were

last decade. difference in the game now in silicon valley versus the last boput? >> nowhere near, still very different. in the last decade, prices overvaluedor more compared to fundamentals like incomes and rent. now in silicon valley, rises look five percent or 10% overvalued. >> every market really is local. thatbrothers as noted companies are making more money because it is moving into cities and putting up the holdings. as opposed to homes. -- are putting up buildings as opposed to homes. will we see that in suburbia? >> i think we are still seeing this resurgence of downtowns. also seen is a huge surge of multifamily for rent. i think that will start to peek out pretty soon and we will

start to see where there is enough supply and huge increases in rents last couple of years will slow down. we talked about how the home prices will slow down. going back to the question about are atblel,ot prices peak levels. that will have an impact on the builders going forward. >> new-home sales are not the bulk of the market, it is really existing home sales. when you get new-home sales data, what do you read into it? >> new-home sales right now are about 1/10 of the market. .ormally, it is 6 to 1 construction and there were foreclosures that have added to the existing home side. that has pushed high but i think we will see continued strength in the apartment construction sector. many young adults are at the y are lookingher

to move out of their parents houses. it is still strong on the rental side. >supply versus demand -- there s debate about what is holding back builders and they are pointing to supply constraints. how much is it really supply constraints with expensive labor versus weak demand for single-family homes? >> last year, it was all about supply. the builders said i cannot get lots or keep trades on my site. this year, that is still an issue but we also have the demand side. the consumers are afraid. many of them pulled forward and bought in the first half of 2013 so they are not there in as large in as large a number to buy this year. thing, the weather weather was certainly a big factor even in raleigh and atlanta were builders were unable to complete homes and people not coming up to five but even in phoenix, las vegas, florida, sales of come down relative to one year ago so it's

not all weather and that's important. >> thank you for joining us today. coming up, our neighbors to the north are getting it he'll on the food that makes everything taste that are as long as you are a carnivore, bacon. our single best chart is next. >> even raw. >> this is "bloomberg surveillance," on bloomberg television, streaming on your phone, your tablet, and bloomberg.com. ♪

>> good morning, everyone. this will enters to number of people -- officials of malaysia say satellite images show more than 100 potential objects in the search area of the missing malaysia airlines jet and this comes as aircraft and ships have resumed the search for the missing malaysia and aircraft and crews will try to search almost 31 thousand square miles of the indian ocean but this is a real breakthrough. we will keep you posted on those headlines. the deadline for obamacare has been extended for last-minute and releasee --nrolless. the process but to not finish will be able to

extend the enrollment time. there is a new top spender and baseball, the l.a. dodgers have passed the yankees as the biggest spenders on the payroll, $235 million. the yankees are a distant second with the payroll of just $204 million. they have been number one for the last 15 years on the red sox , the payroll is slightly higher than our expense report. $153 million. >> they signed david ortiz. nothing else matters. the yankees are where the red sox were a year ago. >> we will see what happens because it can change >> and it's a long season. they need quicker games.

>> this is the year they have to speed up the games. >> how do you speed up a baseball game? >> you put the batter in the baseball -- in the batter's box in the don't get out. >> no more catchers, pitcher conferences anymore? >> we are talking baseball, not doing single best chart. oh, we are. this is for any bacon lover. the price of a pound of they can in canada has more than doubled over the last 18 years. this is for normal sliced bacon. not canadian bacon. [squeal] that's the big before he becomes backthat's the big before he bes bac bacon. >> a pound of bacon will set you back in canada for ellis $.46. a pound of bacon cost even more. it comes from the belly of the take. the canadian bacon is often cut

from the loins. >> things i did not know. >> prices have been going up because there has been some diseases. that has limited the supply. the bacon expert jeff kolko. bacons an artist andal and silicon valley? >> you can meet the pay. >> can you name the peg? >> sometimes you can shake hooves. i grew up kosher and then became a vegetarian. i've got a lot of catching up to do. there are some three bacon per day meals. >> seriously, this shows very the lack of innovation some of these categories. what can you do with food versus

what you can do in the tech space? and baconin l.a. became cold and now it is hot again. bacon is in with the diet people. diet?part of the paleo it's you do no carbs, amazing how much food you can eat because you are constantly hungry. diet? you on the >> sort of naturally. that's what i like to eat, i like meat. if i eat pasta, i get weighed down. a cinnamon bun, forget about it. maybe if you are on that diet you start making pig sounds. >> you can close out the hour with more pig sounds. >> do we have other news?

>> this is serious stuff, what is going on in washington. we want to show you the latest from that devastating mudslide that happened on saturday. it was in washington state about 55 miles from seattle. this is the fifth day of the search and the number three photo, look at that structure sitting in bruins and the aftermath as they try to bring in big equipment. it is frightening to imagine being a worker there and trying to find bodies. 176 people are unaccounted for and 16 are dead. the fifth day of the search and the number three photo, look at that structure sitting in bruins and the it is horrific.y try>> >> it's officially 16 but they think they found eight other bodies. 2 -- a view of the hill that originated. it was a waterlogged hill and it

apparently just completely came apart. >> this was a natural event? >> yes, that that is what is so disconcerting. how do you predict that sort of thing? it ispeople who build homes con about building codes being too strict that there is a reason why codes are strict as they are? >> yes, most regions of the country are at risk for some kind of disaster or another that is natural. it could be earthquakes or floods and it's not just along the coast. the places that are atpeople whn less risk for natural disasters are in the midwest or upstate new york. they have more snow so no one avoids everything. , forgete west coast about the drought right now, we build houses in the dumbest places. >> we build them near the fault line. they are trying to get that addressed in hollywood. >> and houses on stilts.

let me get to our last photograph her in this is the aerial view of the mudslide. you can see this backup of the river and cement-like blankets the river. it is incredible, look at the earth. event and itural was waterlogged. remember how dry it was. you had a very dry several months and all of a sudden, a time of rain and the earth could not hold it. >> whether cannot be in addicted. on the heels of that, coming up, we will talk about king digital and the ipo is coming up. will it be as big as hit as candy crush and we will tell you what takes place on its first day of trading today.

this is "bloomberg surveillance," on bloomberg television, streaming on your phone, your tablet, and bloomberg.com. ♪

>> this is "bloomberg surveillance."

let's get you company news. out a murdoch lays succession plan. he has put his sons and top spots at his global media empire. his younger son has been named co-coo of 20th century fox. ipo,digital prices its raising $500 million by pricing and offering. king atprice values over $7 billion. for 80% of makes up company sales. the irs says bitcoin is property not currency which means the same rules will apply to bitcoin as stock transactions. will pay lower tax rates applicable to capital gains.

>> we are joined by leslie picker. this deal came together very quickly and suggested a hot ipo and yet the prices in the mid point range. what are the bankers telling you about that decision? >> the pricing game is all psychology. andprice above the range let your institutional investors now they have gotten a decent deal and the reason they made a decent deal is because of it as a one hit wonder concern which is candy crush which makes up 78% of king's revenue. the fundamentals look strong a but investors are concerned about the future and growth is expected to slow. revenue growth last year was 1000% which is projected to slow to about 40% but it is probable. people actually read this.

>> this company as opposed to make two dollars 55 cents per year. if it's priced at $22.50, it is trading at 10 times earnings which is cheaper than the market. >> it is really cheap even at the top and. >> why did it become soggy? >> it is the one hit wonder concern. they have one game that is driving so much of the growth. they need to prove they can diversify their revenue stream and they have yet to do that. >> you got that from a 10 day junket -- i mean work trip to san francisco? what did you learn about ipos? >> i learned the bifurcation of sentiment surrounding the bubble situation on ipos? people on the west coast think we are in a bubble.

they say it depends on where we are. on the east coast, there is a different theory -- people think there is much more sector diversification in the ipo market. cohn is with this, do you agree? >> there is definitely a perception that it's a good time to be on the sell side. there is more fundamental value then there was an there is a lot of revenue. we are talking about a ton of revenue. >> does anybody read a prospectus anymore? >> leslie does. king digital is seen as a more mature company. box is going to go public soon and that is a less mature company. are we shifting toward less mature companies going public as a way to take advantage of the sentiment as we are potentially on the cusp of a bubble? >> i think so, last year it was

what kind of ipos could you be the best eland this year, we have seen companies go public like one that had other team million dollars in revenue. these are newer companies and more growth based. >> any newly minted billionaires coming out? >> not that i know of. >> no one is cashing out? >> they are cashing out but maybe not making billions. leslie picker is with us and gentlemen, thank you so much. it is on wonderful to have you here. let's do a forex report right now. the ruble continues to strengthen, 35.46. xy is back above 80 and the dollar is slightly stronger in the last couple of days. what an interesting day. >> we also have more data today

that will affect the durable goods coming out of 8:30 a.m. and market pmi as well. in the next hour, we will talk about.exotica ♪

♪

worldebook stuns the tech and acquires virtual reality for $2 billion. also, after a four-year bull market, should adam johnson move out of cash? we will discuss that in this hour. good morning, everyone. we welcome all of you worldwide this morning. scarlet fu is with me. adam johnson as well. mr. johnson will get us started with our morning brief. >> good morning, tom. overnight the bank of japan could decide as soon as the middle of may as whether more inflation is needed -- more stimulus is needed to keep inflation on track. the federal reserve bank of st. louis said that policymakers have not submitted to a specific month. he spoke with betty liu in hong kong earlier today. as far as economic data in the u.s., any moment we will get mortgage application data. wax just out.

week..5% last >> after having been down 1.2% the week before. >> it actually rose up. >> all right. we have the durable goods orders. in other words, what people are buying, but businesses are buying. we have the pmi purchasing manager index coming up, who is buying what? earnings, nothing to speak of today, but the king visual starts trading this morning. make sure to tune into market makers this morning when they interview the maker of candy crushed, the ever popular game. >> mr. toffee? >> could not get past it. murdoch, laying out a succession plan. the billionaire has put his sons at the top spots of his global media empire. lots of people working beside sonfather, the younger

james has been named co-coo of 20th century fox. the brothers were already directors of both companies. each team banking on a new phone to increase profits. that htc hopeses will pull in other early adapters. hoping to avoid the problems that plagued previous models. target will be grilled on the hacking scandal earlier today. the retailer will be performing -- will be introduced before a senate committee responding to the data breaches over the holidays. that is today's company news. and of course, the big company news. wax shock and awe over facebook. the reality is 400 million in

cash, technology companies assigned to acquire the brain company of these -- the brainpower of these tech companies. this is a wonderful book, "the facebook effect." mr. kirkpatrick, good morning. this a reality, is consumer product? >> it is not a consumer product yet, which is one of the interesting things about it costing so much. it is not even released to people yet, it is just out to developers to play with. at the moment it is technically not. >> i am curious, david, as tom mentioned, you wrote the book "the facebook effect." what is the effect of this purchase on facebook? >> a great question. one of the things we are starting to see about facebook the company is that facebook the service is not the whole story. i think that this purchase has two goals. one is short-term, the other is

much bigger and long-term. the short-term goal is they have always made a lot out of gains. there facebook platform has been critical for games. they want to build it into a stronger platform for games. i think they feel they can win, even if this long-term does not pan out, as long as there is a better platform for games. the longer term vision is to create a new platform that could in effect compete with facebook as we know it today. >> cannibalizing itself. the cofounderth and ceo. take a listen to what he said about the future of the design of the virtual reality headset. >> in the future, when decade from now, our goal is to get it closer and closer to sunglasses. you want blacked out, ray bans style sunglasses that look cool and are wearable.

wearable and portable. throw them in your pocket. that is a goal we are working towards. >> futures the key word here. is that purchase motivated more by fear than good business? they were notably late on the shift to mobile. >> no, as far as i have ever seen mark zuckerberg, he is never motivated by fear. it is just not the way he thinks. he is one of these people that always thought everything would work out when he is 19 and still today when he is 30. almost 30. i think that he believes the world is changing, the future is going to be this immersive togetherness that facebook will facilitate. it is an optimistic long-term acquisition from that point of view. >> i just put this out on twitter. bruce taylor just wrote a fabulous essay on the silliness of the harping and criticizing of mark zuckerberg.

to speak tou want the critics of mark zuckerberg and facebook? what would you say to them? at theways say -- look results. he has a company with one .2 billion users over 10 years. how much can you cavil about that? is probably the most extraordinary company builder in human history in terms of number of customers over a. of time. he's easy to second-guess because a lot of us do not understand what he is doing. because i know the guy well enough, as i said before, he has optimism. he makes a mistake but he is not doing it out of a defensive, moneygrubbing -- all of these criticisms, the privacy invading mindset that people have accused him of. >> there has been pushed back. the creator of mine kraft

canceled plans to bring it over because he said that facebook creeps him out. is that not a concern? >> it is. there are two things i would worry about regarding this acquisition. as tom pointed out, 400 million dollars for facebook is a drop in the bucket, but number one they do not even have a product of an ocular. who knows what is going to happen with this thing. can it bething is -- as successful inside facebook as it might have been as a freestanding company? they generate all of these concerns about privacy in particular, which i think is what mine kraft was talking about. that is a real concern that we do not really know. i happen to think you will be able to manage that. product actually help facebook make more money? >> i will say that if they did not think they would in the long run, even zuckerberg's board would not have agreed to it erie

it he probably convinced the board that there is a strong enough case that this will make money in the long run in a virtual reality landscape platform point of view. and in the short-term, through gaming. can i say one other thing about the company? it was fascinating, this week, sheryl sandberg was being praised for not having colluded over the earnings of engineers the way that every other tech company in silicon valley did. that made them look good from an ethics and privacy invasion point of view. >> critically valuable. thank you so much. we are thrilled to bring you someone removed from the silliness of valuations. value, hefor buying has been a bull at apple time and again. howard, honored to have you here today. at $2ne pushed out billion value. i say it was a $400 million cash

transaction with some funny money attached. is facebook stock so overvalued that it is a suckers currency to the tech world? >> that is a bit strong. nowgrowth of facebook right is quite strong. much stronger than anyone would have guessed a year ago. especially what they are doing is they are following the google model. generating a lot of cash, a fairly somewhat expensive stock, using the currency to make acquisitions. some of these deals will work, some won't. >> somewhat expensive versus the idea of twitter and facebook? >> how about the idea of facebook are growing in the way that apple used to grow, but you still like apple. why? >> this is a pre-cash flow story. this is the company that is going to make more profit this year, more cash flow than any in the world.

we are holding it to different standard. >> better than growth? >> go -- growth begets size. apple's biggest problem is its size. you are not paying anything for growth right now. you are giving dividends, share buyback, and you still have the dominant mobile phone provider, the iphone system. >> good morning to everyone. howard, the new york rangers today. >> he knows how to get on your good side. >> i tell you. >> twitter question of the day, what company should facebook by? tweet us. ♪

>> good morning, everyone. ward, hashost, howard been long and right, chief investment officer at growth equities. google glass in the news. howard ward, he likes the eyeglass monopoly. they are a roll up, are they not ? of all the eyeglass makers? luxottica?

>> for most of the designer i-frames, they operate under license with manufacturing. the frames operate under the license of a tiffany, product, burberry, whoever it might be. they really own the business. regardless of where you go, when you walked out of the store you probably have purchased i-frames from them but you will not find your nate -- their name on it. this stock over the last year is a nice, steady, boring franchise. an important point for the market, you have seen what happened over the last couple of weeks. the best performers of the last year or two, they are very susceptible to profit taking. they have not done anything. >> biotech on the chin. netflix on the chin. is this hiding? >> it screams those sectors of the market being very valuable,

prone to overtaking. a significant correction for real earnings there. tesla, netflix, linkedin, the upset sector of the market is overpriced. >> you are in barons all the time, read by many of our viewers on the weekend. are they the ones moving these stocks up? or is it the hedge fund cowboys? >> i think that capital chases returns. tradersre big momentum of all stripes. it attracts the people that want to play the momentum. if you are holding that stock when the music stops -- >> you will get 10% on the chin right away. where is the value trap right now? >> i think that the market overall is in pretty good shape. i would be wary of some of the financials and bank stocks that still have a lot of fans out there. we owned some two.

i'm easy money has been made there. trading belowart book value but not as cheap as they were. course, coming up we will continue to give you perspective on oculus. we have a wonderful video on that. our twitter question of the day is simple, what companies should facebook buy next? stay with us. ♪

>> good morning, everyone. "bloomberg surveillance." howard with us, the chief investment officer there, we will talk equity markets and a bit. futures are up seven. dow futures are up 60. our top headlines? >> bank of japan could decide by the middle of may of more stimulus is needed after the

company's sales tax is raised. moving on, officials in malaysia say that satellite images showed more than 100 potential objects in the search area of the missing jet. this news comes after six nations have resumed searching for the plane. they will be searching the indian ocean, looking for debris and perhaps a black box with some answers. three secret service agents assigned to president obama and amsterdam were sent home after a night of drinking. one of the three was found drunk the day before the president arrived. clearly they were all members of the counter assault team of the service assigned to protect presidential motorcades. there is a new top spinner in baseball. the dodgers past the yankees as the biggest spenders according press.associated they were already in distant second for payroll. they had been number one for the

last 15 years. the red sox have a payroll of 160. alexa very good. is thelion dollars, that cost per year for vladimir putin. he is patient as western leaders react to the mixed -- to the next election. leaders of russia will be playing along diplomatic game. with us, a former member of the united states army intelligence of afghanistan. i love your research note, trying to quantify the cost to russia. how big will the economic cost be to russia? cost tonk the economic russia is huge. you mentioned that the treasury is estimating about 2.8 million u.s. dollars -- 2.8 billion u.s. dollars per year that they are going to leak in terms of payments to crimea. not a huge moneymaker for russia. >> but that is just a margin of the cost to keep crimea going.

>> that is right. >> we are talking about crimea or ukraine, we are now back to crimea. for your diplomatic history courses, we are back to crimea. >> right. , under george w. bush and president obama, wrote for the journal that this was the challenge to the west. with no apparent designs to retrieve the soviet union, he is clearly attempting to re-create the russian sphere of dominance. he says that putin is playing a long game. if putin is playing a long game, who wins in a game of dominating escalation? is seeking to expand its influence. it is doing that in a territorial manner. it is also doing that in terms of an extraterritorial manner, extending -- seeking to extend the legal mind of russia into

forformer republics russians carrying passports. he really is playing a long game. >> in burbank,. us, we talked about this. they were heated, sending anchors to ukraine, it was so different from moscow. does vladimir putin want to do this as a buffer to the western world? teacha projection to russia capitalism? is he going to buffer into the czech republic? >> it is possible. anything is possible with vladimir putin. he could go beyond crimea to ukraine. >> moldovan is the one we have been speaking of. >> the united states and our friends and allies really need a consider pushing our forces

little bit closer into that line. we will potentially create a tripwire. tripwires have been effective in south korea, keeping north korea from going over. >> this is an important statement. where will we project the troops? back to germany? >> it does not necessarily have to just be u.s. troops, right? it could be a multilateral force. but we need to think about potentially increasing multilateral military exercises or presences in such a way that shows resolved. right now we are not showing much military resolve with russia. hadoward yesterday at gamco a prime story talking about value investors going into russia and ukraine on the bonds. you are more of an equity guy. but how do you actually look at these markets?

can you justify deploying capital in a place like this? >> me at. --nyet. as a manager of the global fund, i have no investment in russia and with the current regime i would have no intention of making them. what has happened in russia reminds investors that it investing in the emerging markets has risk. it is a different world. this had been the best asset class for 10 years until two years ago. like most asset classes that outperform for 10 years, that is a red flag. look out. now things are starting to go less well. whether it is the situation with russia, the slowdown in china, problems in brazil, argentina, venezuela. piece by piece, the story of the emerging markets is becoming less compelling.

want a value trap? russia. underscored. thank you so much. wonderful to have you here. >> large numbers of young people across the globe, unemployed. what does it mean for lyrical stability? we will discuss on "surveillance." ♪

>> this is "bloomberg surveillance." let's get to some company news right now. suing celebes over the auction , the hedge fund charges that sotheby's is leading the

takeover as a way to impede a proxy contest. he has proposed three directors to the board as part of efforts to increase value. possiblelosing a successor to jamie dimon, mike cavanaugh is leaving the firm for the carlyle group. he has served closely to jamie dimon for two decades. toyota is buying back shares for the first time in five years. they will accept 3.5 billion dollars to buy back 60 million shares, including their profit increases in their cache files with half of the shares being repurchased by the end of june. that is your timetable. a $2 billion gamble for facebook investing in virtual reality. the newest acquisition is ocular , making these ski goggles, all right? the prototype with gamers chomping at the bit for

when this thing is commercially viable. toious himself, he decided test out a version. check this out. i am wearing a virtual reality headset, flying into space. >> i can see the asteroids around me, firing at my enemies, these are the enemies that i am firing at. >> the big promise is that virtual reality will finally feel real. >> what if virtual reality were perfect? an experience of this fidelity, feeling like the matrix, like we were in the same space russian mark >> palmer lucky created the headset in his parents -- space? >> palmer lucky created the headset in his parents garage. >> now you are the cofounder of a company that is worth 75 million dollars, moving towards a commercial product, you can

live your passion. >> a lot of people who are a lot smarter at what they do are interested in me now. i was always skeptical about virtual reality. i grew up in the 1980's, 1990's. it was a lot of expectation and excitement around it, but the technology was not ready. now it is finally there. all it takes is seeing it for a few seconds and you realize there is the potential to change the world. >> oculus has a new technology called positional tracking. his virtual character leans forward as well, moving into the digital world with a new perspective. >> we are finally able to deliver on the promise of 3-d environments that are nearly photorealistic. >> we have accomplished a lot with this version. i feelprevious systems, no nausea. it is like i am there. >> the buzz has brought up the

competition. sony just announced project morpheus for the playstation four. but executives at oculus on not worried. >> people will jump in because we have proven that there is a market. i hope they take it seriously. it just makes vr that much more of an industry. >> both companies have many hurdles ahead of them. it is not clear if the biggest gaming software developers will ever embrace the technology. >> one can consumers buy one of these? >> what it is ready. not a second before. >> 2014? next we will see. >> amazing stuff, right? our guest host for the hour, the chief investment officer thereof growth equity. money and growth. glassterday we saw google preparing to team up with exotica.

has a lot ofoculus tough work ahead of it. important,it is so howard, the optimism that you have for decades comes from the animal spirit of business transactions. do you own facebook? >> we bought facebook at $30. we trimmed a bit of it a couple of weeks ago, but we still have it. >> this optimism is based on the back and forth of these businesses. businesses get it done. >> the american economy and american stock market are extremely durable overtime. that is the warren buffett message, too. but you have to make the commitment. >> it is not just a question of the value of price, but of story. >> quickly, and jeremy grantham is in the market right now. >> speaking of the markets,

let's get a data check ahead of durable goods numbers. futures are higher, a steady lineup over the last couple of hours. the yields are also coming up a bit, two point 57% on the 10 year. >> good morning, everyone. futures are up six. all of the interviews are on the digital space. plus there is a lot going on at bloomberg.com as well. particularly of me using google glass yesterday. >> that was good. >> with me, scarlet fu and adam johnson. our guest host this hour is howard ward, looking at equity markets. we will do that in just a bit. >> the structural part within the economy, young people have one thing in common across the globe, difficulty landing a job.

it appears that high levels of jobless young people are destabilizing already unstable countries. a new report on youth unemployment coming from washington. this is an issue in the united east,, europe, the middle africa, asia. what is the distinction in the united states versus around the world? level of education? >> it is very much of a supply issue in the united states. youth unemployment is very much concentrated amongst those with the least education. they are trying hard to find jobs in the economy really does not need for so many people without skills. they are really struggling. in other countries it is different. high youth unemployment amongst those with college degrees, but not in the united states. >> will the trend evolve towards united states? or move more towards what we see in the rest of the world? an excess of jobless college

graduates? through someone brutal financial cycles in the united states. you have seen unemployment go up over all and it is now coming down and we are hopeful that american college graduates will be back at normal levels of them -- of employment over the next several years. but you have to look at what people are studying as well. there is a huge demand for people with more technically oriented skills. they do not have any employment problems. people with more general degrees , without the hard skills involved, are taking longer to find their first job. >> bill gates has said that for every one non-us citizen hired with a high degree of expertise, it leads to five other jobs being created at microsoft. but we also hear from members of

congress that hiring people from outside the u.s. takes jobs away from americans? where do you come down on this? >> in the united states we have an enormous lack of people with the requisite technical skills. engineering skills in particular, that we need. it is not just a question of not hiring foreign workers. we simply don't have enough american workers with the skills in particular areas that are needed. down on growing the economy. growing the upon me with the people needed to grow it. couldn't we be doing more to channel young people into those programs that will provide them with technical skills? hands-on training? i think we can. >> what does your research show about unemployed single young men? people cite them as potentially dangerous combinations. angry, helpless, frustrated,

there is talk that they could turn to violence and social unrest. this is something that countries like asia and africa will need to contend with. >> there has been a lot of work done looking at the connection between high rates of youth unemployment and political instability. we have seen that political instability roll across the middle east, of course, in recent years. highest levels of youth unemployment among those with college degrees. higher levels of education. people are taking to the streets who are fomenting social unrest younge not illiterate people who have never been to school. they are those in the community with the highest levels of education with high aspirations that they cannot meet because the economy is not able to absorb them. >> it is certainly a challenge for different governments around the country and the world. thank you so much, isabel thomas

joining us from washington. this is especially going to be a big deal, with the elections being held across the emerging world. coming up, king digital and the ipo, what to look for on their first day of trading. ♪

>> good morning, everyone. good morning to you worldwide on this perfect morning in new york city. tops get started with the headlines. >> overseas first, bank of japan could not decide in mid-may if more stimulus is needed. according to an aide to the prime minister, anything additional would be an effort to keep inflation ontrack to meet the bank's target of two percent. the president of taiwan says he is willing to meet with protesters who seized the legislature last week, which grew out of anger over demonstrations with china and violent clashes with police. the offer was called insincere by student groups. stuff, a dramatic rescue of a construction worker in houston. the man was working on the sixth floor of a new apartment complex when the fire broke out. he dropped down one floor and was ready to jump when the firefighters got to him.

they were ready to rescue him just before the upper floors collapsed. that is scary stuff. >> just amazing. >> amazing, amazing, right? >> they got him out. life there is a reason we call guys like that heroes. >> it really matters. >> look at that. >> geez. thisanks to our team morning. >> another headline that we need , the st. louis fed president sitting down in hong kong today. here is what he said at that time my meeting. >> i think there is a bit of ambiguity around the notion of when the program ends. what does that mean? october, december, january? we have seen different

interpretations of that. that that is what is getting the timing of bit off. for some people. but i want to stress that this is not a calendar-based policy. it is a databased policy. not just some sketch of a timeline the people have. that is for the committee is going to do. but we will do will depend on the data. >> obfuscating what was said. >> perfect for howard. jeremy there, because of the set are you a bull? >> i will tell you i am a bull, but not because of the federal reserve. i am a bull because the inflation rate in this country continues to have one handle on it throughout the year. nothing is more important in my mind for the performance of the economy, the consumer, and the

stock market getting a very rote -- very low rate of inflation higher than today, which provides a stable economic background to make future decisions, including hiring decisions. once set in inflation, there are good things. >> we will come back. up, president obama continues his world tour. we will tell you where he is headed next. ♪

importantw, an interview on "bloomberg surveillance." wired into the entire barclays research combat -- combine nationwide. forward to mr. cantor. >> this is "bloomberg surveillance." our guest host is the chief genvec best chief investment officer of the mobile growth fund outside the u.s.. let's get you some company news right now from the files of bloomberg west. rupert murdoch, laying out a succession plan, putting his sons in top spots at

his global media empire. his younger son, james, was named the co-coo of 20th century fox. these brothers were already directors of both companies. htc,ng on a new phone at the chinese company is introducing a new version of its one smartphone. it has a smaller screen and other features that hopefully attract early adopters. rules that bitcoin his property, not currency, meaning that the same rules will apply to it that apply to stocks with barter transactions. more than one year, they would pay the lowest tax rate under this ruling. that is today's company news. >> a huge deal. >> the irs finally makes an

announcement on it and it takes effect immediately as well. >> a huge decision. >> the government is effectively saying that they will make it so difficult to transact in bitcoin. >> it has been a rolling debate. back and forth, back and forth. matt miller's coin series was really eye-opening. >> think about how it has changed. back then it seemed like -- wow, this might to fill the promise. >> i learned from matt miller's effort. reporter at newsweek tracked down, supposedly, the founder and inventor. us on "street smart." >> i have been following banks where bitcoin is so large, you have to stop as required to say -- it is no big deal who did this. i'm ok with being skeptical of certain details, of kicking the

tires more. what i really do think that there is more to this and i am happy. toshe is of course referring santosh e nakamoto, the supposedly investor of bitcoin. >> that was a heated interview. it really got the debate going. howard ford is with us, from gamco. i was suggest you are not part of the bitcoin community? i would expect to be sued as a fiduciary. signing up on speculative excess. kids indo the young bitcoin get wrong? >> this is not a real currency. this is like a digital furby doll. >> that was too good. >> people are being careless with their money because we have five years of screaming bull markets. you get careless.

now, on bitcoin are we getting less careless when we see oculus? >> that is facebook. that is facebook with too much money. but how is pegging $19 or $2n for what'sapp billion for oculus, which does .ot exist yet this is not, in my opinion, it looks -- >> bitcoin is worth it, is there any for alternative crises?

>> you cannot just invent a currency. very odd. whole thing i'm going to play devil's advocate again. you are in prison, trading cigarettes back and forth, you just invented a currency. >> the imf has done a lot of research on the supposedly in iticiencies over the rest of . >> have a tackle bitcoin? >> by the way, when you do an fx digits?s that in four it is a tight market and there are costs involved because there are safeguards in place to protect a currency that is worth something. >> the underlying tax authority i think is the key issue.

howard, let's turn to the equity markets as well. for or five years into a bull market, cash is the rage. me --rl icon your friend friend me -- frenemy right now? up,f it helps the stock go i am like -- hey, that's great. >> are you seeing investment improve? seeing the animal spirit clicking in? >> yes. there have been a lot of decisions deferred because of uncertainty and lack of confidence, but now that the economy is doing better, confidence is returning, that will take money away from what is being used to buy back stock. >> is it the valuation being so great that you have to deal with large cap because it is so dam cheap? >> that is certainly a better relative value right now. tremendous outperformance over

the last 10 years. remember, they did not have the last decade. they continued to go up. now those tables have been reversed. small caps are historically expensive, large caps are not. now it is happening? it is a positive, but which areas are businesses going to spend the most on? going to go back to my comment about inflation. the consumer is the big winner. consumer discretionary companies will benefit from increased consumer spending power and expanding payrolls. place i woulds a focus on. you will also have clear winners with pent-up demand on all of those, pent-up demand for durables of all kinds. pent-up demand for housing. that many of the industrial companies that feed into those markets are the

companies that make stuff. stuff for conserver -- for consumers and for cap ask. >> all right, let's get to the agenda. the stories for the day. thes busy as we go through end of the quarter, to me this has got to be the focus, the president is on a trip. i think it has been a very constructive trip. it is, emotional attendance at the world war i american six acres in belgium. memorize that in school, that canadian poet. the president is winning with the drama of the moment and he has to come back to finish 2014 strong. maker ofigital, the candy crushed, priced at 20 two dollars 50 cents. the midpoint of the range given the forecast earnings of two

dollars 44 cents, trading at 9.2 times earnings. i want to see how this trades as soon as it opens. >> that is what leslie was saying. my agenda item is the top technology story of the day, for $2k richeson oculus billion, 400 million dollars in cash, $1.6 billion in stock. the stock has jumped 150% in the last year. our twitter question of the day -- what company should facebook buy next? >> how about this? >> facebook should buy facebook. like there is an idea. >> waste management, learn to not waste money? >> snarked. more hoursfor two

with howard ward. thank you so much. >> all right. bloomberg surveillance on radio continues, durable goods at 8:30 a.m.. have a great morning, everyone.

>> i do not know why the committee changed the language. i think that message is getting through to markets, that is the